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Hi,I would like to share with you one of Procurement Scenario which involved replacing of Purchase Order by Scheduling agreements.

Business Scenario : Business involved in manufacturing standard products,raw material required for producing these product are on continuous basis,each raw material is having fixed vendor.requirement for standard products generated base on re-order level planning.requirement generate for raw materials generate in system after MRP run.purchase order is created for open purchase requisition and sent to vendors.vendors delivering goods as per communication with buyers.every new Purchase requisition generated later included in old PO with new line item,message sent to fix vendor through telecommunication,on receipt of material at shop,goods receipt not possible at stores because of reasons like PO was not created,PO was not released this result in delay in goods receipt at stored in system.due to urgency at production line goods issue to shop without entry in system.later this result in mismatch of inventory etc.

Major Issues :

1.Component not available for production on time.

2.Continuous amendments in same PO frequently,this affect vendor evaluation process

3.PO approval required frequently due changes in PO,Buyer has to do follow up with Purchasing Manager for PO release.

4.Delay in PO release result in delay to communication to vendors and delay in Material delivery.

5.Vendors not having formal document with right quantity,for future planning.

Solution :

To Overcome such issues scheduling agreement are use as replacement of purchase orders for standard components which are required frequently.

steps follows in process:

1.Scheduling agreements created with validity period of 6 months with maximum possible quantity for all vendors.(ME31L)

SA-H.PNG

2.All Open PO for vendors identified and closed.(TCODE-MEMASSPO)

PO Mass Change.PNG

3.All Scheduling agreements released by Purchasing Manager ( TCODE-ME35 )

SA Release.PNG

4.Source list created for components with Scheduling agreement and MRP usage 2 ( Record relevant to MRP. Sched. lines generated automatically )

SL.PNG

5.After MRP run,system generate schedule lines for requirements.

6.To avoid over-written of schedule line orders trade-off-zone updated with more than Planned delivery time.(TCODE-ME32L )

SA item.PNG

5.These schedule are email to vendors.

6.Vendors deliver goods as per delivery dates.stores takes goods receipt against SA for open schedule line quantity.

7.Invoice receipt will be done against SA for GR Quantity.

Benefits:

1.Reduction in vendor follow-up time of buyers.

2.Saving of buyer time which was spent for amendment of POs.

3.No follow up for order approval required,Once SA is released it will be valid for validity period mention in it.

4.Accuracy in vendor evaluation process.

5.Timely availability of components at production line.

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